August CPI Pivotal as Waller Floats Rate Hike — SkimNews
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- Federal Reserve Governor Christopher Waller said he would consider a rate hike if Friday's CPI "comes in hot," while also noting "recent data suggest we are finally seeing some signs of disinflation" that could keep rates unchanged.
- The August Consumer Price Index is expected to show a 0.4% monthly rise and a flat 3.4% year-over-year rate, with core inflation projected at 0.2% month-over-month — Citigroup calling the report "crucial" and writing "the fate of the September FOMC meeting lies with August CPI."
- Fed Chairman Kevin Warsh, newly installed by Trump, described the labor market as "stable" and prices as "more concerning," but declined to say how the Fed would react if inflation trended higher in Friday's report.
- U.S. crude oil surged above $100 a barrel for the first time since May, with Brent passing $107 — a spike Friday's CPI data won't capture because the report covers a period when oil was trading in the low $80s.
- The national average gasoline price hit $4.27 on Thursday, up 44% since the war with Iran began on Feb. 28, while mortgage rates climbed to 7.07% as the 10-year Treasury yield reached its highest level since 2007.
- The August jobs report showed the U.S. economy added 162,000 roles — far more than expected — with upward revisions to June and July, suggesting the labor market is stable enough to absorb a rate hike.
Why it matters: Gas at $4.27 (up 44% since the Iran war began Feb. 28) and mortgages at 7.07% mean a Fed rate hike would compound affordability strain on Americans, yet the "stable" labor market — 162,000 jobs added in August — gives newly-installed Chair Warsh political and economic cover to act. The CPI report's data window predates oil's 20%+ surge past $100 a barrel, meaning a seemingly moderate print still masks a cost shock not yet reflected in Friday's numbers.
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